December 26, 2024
The end of one year and beginning of another is an opportunity for a fresh start, including for your finances.
After a year filled with economic headwinds, many consumers are taking action, including the 33% in the region who are cutting back on non-essential spending, according to a WSFS Bank Money Trends Survey.
Here are tips to help set your financial resolutions and prepare for the year ahead.
The WSFS survey found 41% in the region who are saving more this year cite having specific savings goals as the reason.
Start by setting specific goals, such as building an emergency fund or saving for a downpayment on a house. Having clear objectives and a defined timeline will motivate you to save consistently.
Ensure you set both short- and long-term goals. For example, a short-term goal to save for a vacation and a long-term goal to save enough to cover six months of expenses in your emergency fund.
There is no one correct way to budget, so find a method that works for you and stick to it. For example, the 50/30/20 rule allocates 50% toward necessities like bills, 30% for discretionary spending like entertainment, and 20% toward savings.
If you don’t already have a budget in place, start now. Set a realistic budget that aligns with your goals and review it regularly to adapt to changes in your income or expenses. The key to a successful budget is flexibility and consistency.
One way to help increase your savings over time is through automation and “paying yourself first.” Set your direct deposit to have a portion of your paycheck go directly to savings vs. into your checking account. You’re less likely to miss the money if it was “never there.”
The start of the year often coincides with the time when many employees receive a raise and/or bonus. If your income increased or will soon and you’re keeping up with your regular expenses, divert the extra pay to long-term savings.
Bucketing your savings by each of your financial goals can be another way to stay on track. Some other ways to streamline your saving is to set up automatic transfers from your checking account to a high-yield money market account or to open a certificate of deposit (CD) to take advantage of still-elevated interest rates.
Changing spending habits is hard, but small adjustments make a difference in the long run. Take a deep dive on your expenses and look for areas to cut like delivery apps, streaming services or by renegotiating bills like your phone and internet with providers.
Create lists before you hit the store or your favorite online retailer to stay on task and avoid impulse purchases. There are also apps that automatically round up your purchases and divert the extra money into your savings.
Planning for expenses, especially larger ones like a new car, in advance can provide more runway for you to save for your goals and help avoid unexpected expenses.
With interest rates beginning to decline, consumers should also keep a close eye on their debt and plan to tackle it. Consolidating debt using a credit card with a 0% introductory rate or a home equity line of credit are just two options. If rates have decreased below what you are currently paying on loans like your mortgage, refinancing can also be an option.
While recent economic conditions have made it harder to save for many consumers, it is important to keep your future in mind. Take advantage of compound interest by ensuring you’re contributing to your retirement savings. If your employer offers matching contributions, strive to contribute enough to at least maximize the match and then increase your allocation over time.
Wherever your find yourself in your financial journey, remember that small steps add up over time, so stay disciplined. Reach out to your local banker if you need assistance setting goals and crafting your plan to reach them.
The survey was conducted by research company Opinium. The sample includes 1,000 respondents in the Greater Philadelphia and Delaware region who reside in five southeastern Pennsylvania counties (Bucks, Chester, Delaware, Montgomery and Philadelphia), four southern New Jersey counties (Atlantic, Burlington, Camden and Gloucester), and all three Delaware counties (Kent, Sussex and New Castle). All respondents were ages 18-55. The online survey was conducted from August 23-September 5, 2024, with a margin of error of +/- 3 percent.
